- Japan PM Abe will resign over health concerns.
- The US dollar weakness added to the decline.
- Continued risk-on mood helps to limit JPY gains.
The USD/JPY managed to crawl back to near 105.40-50 region after getting hit by a wave of selling earlier in the day. The pair continued its heavily offered tone in the early US session today but had managed to rebound by 20-25 pips from the day’s low.
The earlier selling emerged after the news that Japan’s Prime Minister Shinzo Abe will be resigning soon due to health concerns. The selloff was dramatic compared to the strength shown recently, shedding 175 pips from 107.00 region.
The US dollar got hit after Fed Chair Jerome Powell said on Thursday that the US central bank is ready to let inflation stay above the targeted two-Percent for some time to compensate for the years the inflation was under the targeted level. The comments triggered hopes that Fed rates would be kept lower for longer than earlier planned.
The dollar selling momentum continued amidst the release of mixed US economic data: the Core PCE Price Index, Personal Income and Spending data.
The technical picture suggests the selling started below a near one-month-old ascending trend-line support.
The bullish mood in the global markets put the Japanese Yen in less demand and offered support to the USD/JPY pair as it moved into the intraday oversold region. Today’s selling has put the pair on its path to end the week on a diluted note, and it might continue the downfall in the coming week.